Football deal highlights Spark Sky TV threat

It's no coincidence Sky TV reported a $240 million loss days
after Spark won the Premier League Football rights. A thread
connects the two news stories.

Spark is New Zealand's
rising media power. Sky is still number one, but
fading.

You can't blame Sky's problems on Spark's football
win. The traditional pay-TV company hasn't owned Premier
League rights for five years now. Yet the move underscores
the shift from old school television technology to streaming
media.

Football key to sport portfolio

The English
Premier League joins Spark's growing TV portfolio.

The
telco, yes Spark is still mainly a telco, also has the local
rights to Manchester United TV. On the team's current form
that may not be much to write home about. Even so it's a
sound investment. United is the best know and most followed
English club outside of the UK.

Spark says it plans to
wrap the two football deals into a new standalone sports
media business. Spark already has the rights to next
year’s Rugby World Cup.

The company has hinted there is
still more to come. Sky TV doesn't have the clout, or the
money, it once had. So Spark has an opportunity to prise
other popular sports away from the incumbent. If nothing
else, New Zealand Netball and Cricket must be possible
candidates. And perhaps various motor sports.

Sky
FanPass

This is not great news for Sky. But there are
chinks of light among the dark. The pay TV broadcaster cut a
deal allowing Spark to resell its FanPass service.

Fanpass
is now another small, but nicely done plank in Spark's
sports media portfolio. It also means Sky gets to tap a
market that it has previously struggled to reach.

Let's
not forget
LightBox. Spark's streaming TV operation may be a pale
imitation of Netflix, but it's a useful value-add for
Spark's broadband business.

Another useful add-on for
Spark is that it offers cut-price Netflix to customers
signing for long broadband contracts.

Sticky
TV

All-in-all Spark already has enough media properties
to keep viewers glued to its broadband services. And that's
a critical part of the company's TV-over-internet strategy:
customers who buy a bundle of services are less likely to
decamp to a rival broadband service.

Premier League
football isn't New Zealand's most popular sporting code by a
long shot. However, it has particular value for Spark.
First, it tends to be watched by relatively well-heeled fans
who are willing to pay a couple of hundred dollars or so for
a year's worth of games.

Overseas moves

In a media statement
Spark managing director Simon Moutter say his company
developed its plan after looking at overseas sports content
media moves.

He says: “We’ve carefully considered the
different models and will be looking to replicate the good
things other businesses have done and learn from the
challenges they’ve had — all the while thinking
carefully about how sports media fits in a New Zealand
context”.

Spark says it will launch its own sport
‘platform’ early in 2019 and will annouce pricing and
package deals closer to the launch.

Latch

Spark
Sport head Spark hired Jeff Latch to head the Spark Sport
operation. He will oversee buying more content rights and
will take charge of the ‘platform’. Latch was previously
director of content at TVNZ. In that role he was in charge
of buying content, including sport. Spark is partnering with
TVNZ for the Rugby World Cup project.

Latch says Spark
will work with a specialist sports-streaming company. He
says the platform used will be different from the one used
by Spark’s Lightbox service.

He also said Spark intends
its sports media operation to work as a standalone business
and not be used merely as a way to woo broadband or mobile
customers. To a degree this is what Spark has done with
Lightbox.

Netflix close to two million NZ
viewers

Had Sky
merged with Vodafone it may have fought off the
challenge from Spark, although that's far from certain. Yet
nothing could protect Sky from its other threat:
Netflix.

Roy Morgan research says Netflix now has nearly
two million viewers in New Zealand. The service saw
subscription numbers grow 35 percent in the last year to
reach 1.9 million viewers. The research company goes on to
report:

"Now over three million New Zealanders have access
to some form of Pay or Subscription TV, up 13.9 percent on a
year ago. The growth in Pay and Subscription TV is being
driven by the likes of Netflix along with a suite of rival
streaming services including Lightbox, Sky TV’s Neon and
Amazon Prime Video."

Viewer numbers are growing slower for
Sky TV's Neon service. It was up 1.7 percent in the year to
reach a total of 1.6 million viewers. Lightbox is the second
most popular video on demand servide with 830,000 users.
That's up 43 percent on last year, growing faster than
Netflix. Vodafone TV has 295,000.

Contact Bill Bennett

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